The Oxfam report released recently claims that between March-June 2017 and March-June 2018, the wealth of the super-rich grew by $2.5 billion per day on average, while the bottom half of the world’s population saw their wealth dwindle by $500 million daily over the same period.
The annual report, based on data provided by Credit Suisse and Forbes among others was released just ahead of the World Economic Forum meet at Davos. Just like the World Economic Forum, Oxfam’s publication has also become an annual ritual.
Oxfam International was formed in 1995 by a group of non-governmental organisations. As a part of the global movement, its aim is to work towards reducing poverty and injustice. The name Oxfam itself comes from the Oxford Committee for Famine Relief, founded in Oxford in 1942.
Oxfam’s report this year, titled “Public Good or Private Wealth,” has claimed that last year, a mere 26 people owned wealth that is more than the combined wealth of the 3.8 billion people who make up the poorest half of humanity.
Oxfam added in a sombre note that “Our economy is broken, with hundreds of millions of people living in extreme poverty, while huge rewards go to those at the very top”. The report on India says that Indian billionaires saw their fortunes grow by Rs 2,200 crore every day in 2018, with the top 1% of the country’s richest getting richer by 39%, while the bottom half of the population saw only a 3% increase in wealth.
One of the recommendations that Oxfam makes in its report is to “End the under-taxation of rich individuals and corporations. Tax wealth and capital at fairer levels. Stop the race to the bottom on personal income and corporate taxes.
Eliminate tax avoidance and evasion by corporations and the super-rich. Agree to a new set of global rules and institutions to fundamentally redesign the tax system to make it fair, with developing countries having an equal seat at the table”.
But the Oxfam report is flawed. Despite repeated criticisms from many quarters every year that the methodology Oxfam adopts in calculating statistics on poverty is flawed, it does generate a lot of media attention and reactions on social media every year. Critics point out that the report includes a good number of persons in the US and the developed world who live on debt.
What is questionable is its notion that global wealth is a collective pool into which people around the world contribute and from which the rich take a major share, depriving the poor of their meals.
The report says that just 1% of the $112 billion wealth of Amazon’s Jeff Bezos, the world’s richest man currently, is almost equal to the entire health budget of Ethiopia, a country of 105 million people. It seems to insinuate that Bezos has been amassing wealth at the expense of the poor people of the world. This is as preposterous as the statements of many pseudo-academics in India that Mukesh Ambani’s wealth is equal to the budget of many states.
It has become fashionable in academic circles to keep harping on the same cliché for decades now — that “the rich are becoming richer and the poor are becoming poorer”, and that the economic disparity between the rich and the poor is widening.
Reports indicate that poverty in India has halved in the last decade and the number of millionaires is increasing every year. These individuals have become rich by their hard work and not by stealing from the poor.
The standard of living of the people even in rural India has been steadily rising over time, in line with the growth of the economy, which is likely to reach $3 trillion soon. No doubt the rich are becoming richer, but it’s also a fact that the poor are also becoming richer.
Contrary to what Oxfam thinks, the poor in India are doing much better than expected. The Oxfam report seems to make a demon out of capitalism and makes a poor attempt to prove that capitalism has failed. It fails to acknowledge the success stories of start-ups and the hard work of millions of poor people who have come out of poverty because of free markets.
The implications of the Oxfam report suggest that the wealth of the world’s top 1% should be transferred to the bottom 50% population. It seems to suggest that wealth is like a pie and everyone must have a slice of it. What it should focus on, instead, is to suggest ways to increase the size of the pie.
There is little evidence that governments have taken the Oxfam reports seriously and implemented economic reforms. It would have been nice if Oxfam had also acknowledged the philanthropic work undertaken by the rich and the corporates across the world.
(The writer is with Manipal Academy of Banking, Bengaluru)